Contract Law - California Real Estate License

Broker Janet`s client has a legal question concerning the use of electronic negotiations, Janet must ___________. C. refer the client to an attorney This is the correct answer

. Real estate professionals who over-rely on email and electronic documents and signatures run the risk of being ___________. B. unmemorable This is the correct answer

For an e-mail to be legally binding, it must: Congratulations! That's the correct answer! A. Be written in complicated legalese B. Show a meeting of the minds on all material terms C. Include the sentence, "This is a formal negotiation." D. Include no more than three exchanges in the e-mail thread Feedback: For a contract to potentially be considered legally binding, it must show a meeting of the minds on all material terms and contain a signature by someone authorized to participate in the negotiations. Congratulations! Please use the next button to continue.

A real-life drama shows how e-mail can influence a real estate transaction. In 2010, Naldi v Grunberg established some interesting legal precedents relating to the use of electronic documents in real estate transactions. Naldi filed suit against Grunberg for breach of contract, alleging that the defendant failed to honor the plaintiff's first right of refusal on any legitimate, better offer for a 30-day period, a point negotiated in an e-mail exchange between the parties' respective brokers. The deal, however, fell apart after the two parties failed to establish a meeting of the minds on the purchase price (Naldi offered $50 million, while Grunberg countered at $52 million). The court's ruling in the case made three points very clear to real estate professionals: Contracts negotiated electronically cannot be dismissed simply because of their format. The parties involved must agree to all terms as written for the agreement to be legally binding. A broker conducting the negotiations via e-mail must have the proper authority to enter their client into a binding agreement. Let's take a closer look at each of these points over the next few slides. VIRTUAL FIELD TRIP

AIG, Adobe, DocuSign, eOriginal, Genworth Financial, Silanis, and Wells Fargo Home Mortgage are all founding members of __________, an association which keeps a close eye on issues relating to electronic records and e-signatures. D. ESRA This is the correct answer Feedback: The Electronic Signature and Records Association`s (E

AIG, Adobe, DocuSign, eOriginal, Genworth Financial, Silanis, and Wells Fargo Home Mortgage are all founding members of __________, an association which keeps a close eye on issues relating to electronic records and e-signatures. A. NAR This was your answer, which is incorrect. B. EPA C. FHA D. ESRA This is the correct answer Feedback: The Electronic Signature and Records Association`s (E

Naldi v Grunberg, the court found in favor of the defendant based on which of the following: The two parties failed to have a meeting of the minds on the purchase price.

Avoid Accidental Agreements Lesson 1: Set the Stage for Strong Communication Ensure your clients consent to communicate electronically. First and foremost, ensure that your client is okay with communicating electronically (we will go over this point, as well as federal consumer consent provisions, in greater detail in Units 2 and 3). Not every client will be willing and/or able to communicate this way. You might also find that some clients are comfortable getting general updates and quick requests via e-mail, but expect a call or in-person meeting to discuss more detailed matters, such as offers and counteroffers. Whatever the case may be, remember that consent is a crucial factor. If your clients do consent to communicate electronically, make sure they understand the scope of that consent. What will your clients receive electronically? What will they receive formal hardcopies of? Can they withdraw their consent to communicate electronically at some later stage? It is important to iron out such issues upfront to ensure that you and your clients are always on the same page—whether it is an electronic one or a paper one! As we saw with the earlier case study, failing to clarify these issues with your client can have lasting consequences. Finally, if your client does not want to communicate electronically, then it is your responsibility as a real estate professional to honor their preference, even if it means extra time on your part. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

Understand what it means to accept an offer. An offer and an acceptance are both essential parts of any contract. A buyer extends an offer stating willingness to enter into a binding agreement with the seller. When the buyer makes an offer, they give the seller the opportunity to enter into a binding, bilateral agreement upon acceptance. An acceptance is only legally binding if it refers to the exact terms proposed in the offer. Now, when all of the negotiations are happening electronically, confusion can abound. As a real estate agent, it is your responsibility to look out for your client's rights and read every e-mail exchange carefully to ensure your client's best interests are protected. Unit Quizzes and the minimum required study ti

Case study: A real-life lawsuit shows the mirror image rule in action. A 2005 court case illustrates the consequences on the mirror image rule on a real estate transaction. Norma English filed suit against Michael and Laurie Montgomery, claiming a breach of contract in the sale of their home. The Montgomerys denied liability, claiming that the two parties never reached an agreement over terms, so no binding contract was ever created. At issue: The Montgomerys claimed they received English's offer and made several revisions. The Montgomerys signed their counteroffer and submitted it to English, who then signed some, but not all, of the revisions, and resubmitted the offer to the Montgomerys. On appeal, the court decided in favor of the Montgomerys, concluding that the disputed evidence of record showed "no enforceable contract was entered into between the parties," because English "did not initial the changes set forth by the Montgomerys in the personal property section of the document or explicitly confirm her acceptance of those terms by cover letter or otherwise." Further, the court of appeals said that the state in which the dispute occurred: "... employs the 'mirror image rule' with respect to contracts. Under this rule, in order for a contract to be formed, an acceptance of an offer must be absolute, unconditional and identical with the terms of the offer."

Make sure your clients know they can ask questions. Do not let the use of electronic documents and e-signatures put too much distance between you and your clients. After all, you certainly do not want to end up inadvertently isolating your clients. They came to you for your experience, professionalism, and guidance. Just because you are using technology to expedite the transaction process, does not mean that you do not have to be there for you clients to answer their questions and look out for their best interests. Bob Hunt, the former director of NAR, noted in an article for Realty Times that it is important to remain accessible to your clients, stating: "It can be bad enough, to be sure, when agents are face-to-face with principals and those principals feel pressure to hurry up and sign documents. But the electronic mode of communication may make it even easier, some of the attorneys feared, to make plausible the defense that, 'I didn't understand, and they didn't explain, all those things they told me to sign.' "It's nothing new that agents sometimes do not go over with their clients the complex documents that require signatures. But the at-a-distance electronic mode of communication exacerbates the problem. It is something to be concerned about."

Do not underestimate the tech-savvy skills of your clients and customers. Finally, do not underestimate your clients' ability to navigate electronic contracts. As noted earlier, a common reason agents give for not using e-signature technology is that their clients will not understand it. But, according to Nielsen, an information and measurement company, Americans are a tech-savvy group. Just consider the following: More than 80% of Americans have a computer in their homes Almost 92% of those who have a computer in their homes have Internet access More than 50% of mobile phone subscribers use smartphones Additionally, an October 2013 Pew study found that 43% of Americans ages 16 and older now own a tablet computer or e-reader, signaling an even greater shift in how consumers receive and interact with information electronically. If you take the time to explain the technology, there's a good chance your clients will understand and consent. VIRTUAL FIELD TRIP For an interesting look at which age groups are using which gadgets, read "Generations and Their Gadgets," a 2011 study from the Pew Research Center. Check out "Tablet and E-Reader Ownership Update," an October 2013 study, for a closer look at Pew's research into tablet and e-book usage.

Check for Understanding Question: Sara is a relatively new real estate agent, and she loves technology and social media sites like Facebook and Twitter. She constantly uses e-mail or sends texts to keep her clients up to date on their transactions, but she rarely calls them. Plus, thanks to the use of e-signature technology, she hardly ever sees them in person. She has noticed recently that her relationships with her clients never seem to take off, and she rarely gets referrals. She is interested in growing her business, but she feels stuck. What advice would you give her? Congratulations! That's the correct answer! A. She should use a mix of communication modes, such as phone calls, e-mails, and in-person visits, to help develop meaningful and trusting relationships with her clients.

Do not use your personal e-mail account to conduct business. Another way to better ensure that your work-related e-mails get the careful attention they deserve is to keep your work and personal e-mail accounts completely separate. Smartphones make it all too easy to send a quick update or response from your personal e-mail account without actually thinking about it. It is infinitely easier to keep track of your professional correspondence if you use only one e-mail account. Having multiple threads pertaining to one transaction spread across several accounts can get messy fast. By centralizing your e-mail exchanges, you will: Be better organized Come across as more professional Reduce your risk for errors and miscommunications

Select secure electronic software that meets all your needs. While we will go into this topic later in the course, there are a number of electronic software options that will help you conduct your electronic transactions securely and without hassle. You will want to look for software that is: Secure (obviously!) Compatible with your other systems and devices Easy for you to use—and easy for clients to use Customizable (in terms of branding and integration) Capable of authenticating e-signatures Choosing a software that meets your electronic transaction and e-signature needs can seem daunting, but investing in the right technology now can save you money later and provide your business with a decisive competitive edge. Even the National Association of REALTORS® (NAR), in its association with e-signature vendor DocuSign, acknowledges the benefits of this type of technology in providing increased security and speed to transactions. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

E-Mail Disclaimers A debate surrounds the use of disclaimers in e-mail signatures. A disclaimer is a statement intended to outline the rights and obligations that may be expected and/or enforced. In most cases, disclaimers are intended to protect the involved parties, since many e-mails may contain professional advice. Depending on the type, disclaimers may: Specify mutually agreed upon terms and conditions as part of a contract Specify warnings or expectations Limit exposure to damages Represent a voluntary waiver of a right Protect against contractual liability Satisfy legal requirements (for instance, people who provide tax advice are legally obligated to include an e-mail disclaimer) These days, disclaimers are a relatively common inclusion at the bottoms of e-mails, but do they really do any good? There's a mixed sentiment on the value they provide. Some legal experts insist that such disclaimers are overused and offer little, if any, real protection. Still, others say there is no harm including them and counter that they can offer some protection, depending on the circumstances. Some agencies actually include disclaimers relating to their electronic communications in the Conditions of Service section of their agency websites. For instance, one agency presents their guidelines as follows: "When you send e-mails to the ABC Agency, you are communicating with us electronically. You consent to receive communications from us electronically. We will communicate with you by e-mail or by posting notices on this site. You agree that all agreements, notices, disclosures and other communications that we provide to you electronically satisfy any legal requirement that such communications be in writing."

E-mail correspondence can, in fact, act as a binding purchase agreement. Grunberg, the defendant in this case, initially asked the court to dismiss the lawsuit, arguing—among other points—that the negotiations, including the first right of refusal offered to Naldi, were only drafted in an e-mail. The court rejected this argument, stating that an e-mail would have been enough to bind the seller, had an agreement about the price actually been reached. The court was supported in its ruling by the Electronic Signatures in Global and National Commerce Act (ESIGN), which was passed into law in 2000. While we will go into greater detail about ESIGN later in this course, it is important to note here that the act states that: 1) A signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and that 2) A contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

E-mails can be as legitimate as ink-on-paper contracts. Based on ESIGN and other federal and state legislation, the court, in its ruling, further stated: "Thus, we conclude that ESIGN's requirement that an electronically memorialized and subscribed contract be given the same legal effect as a contract memorialized and subscribed on paper is part of [state] law. "Even in the absence of ESIGN ... given the vast growth in the last decade and a half in the number of people and entities regularly using e-mail, we would conclude that the terms 'writing' and 'subscribed' in General Obligations Law § 5-703 should now be construed to include, respectively, records of electronic communications and electronic signatures... "As much as a communication originally written or typed on paper, an e-mail retrievable from computer storage serves the purpose of the statute of frauds by providing 'some objective guaranty, other than word of mouth, that there really has been some deal." As you can see, courts, supported by federal and state laws, are now obligated to ensure that electronic records and signatures are not discounted based solely on their format. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

Make sure the e-signature technology is easy to use—for you and your clients. With so much technology coming at us these days, it is easy to feel overwhelmed by the idea of one more piece of technology to learn. Fortunately, though, e-signature technology is simple and relatively intuitive to use. As you research your e-signature options, try out the free online demonstrations and get a feel for which one you might be the most comfortable with. Many of the e-signature vendors also offer free trials, so you can get an even broader experience. Look for features like "Sign Here" tags that you can insert into documents to help your clients spot the places that require their signatures and/or initials. Most e-signature software options also allow you to check the status of your documents and send automated reminders to outstanding parties, so that you never miss a deadline or overlook a crucial signature. As you play with the software, think not only about how you, as a real estate professional, might use and interact with it, but also about how your clients might perceive it. If you were a client instead of an agent, what questions would you have? What instruction would you need to feel comfortable with e-signature instead of an ink-on-paper signature? Evaluating your e-signature software options from the perspective of an agent and a client will help to ensure that your ultimate selection has the security and ease of use you are looking for.

Ensure that the e-signature software you select is compatible with your other programs. As we have discussed, most e-signature options can run alongside or be integrated with many CRMs, but how compatible are they with everything else? This is definitely something to research carefully and certainly worth discussing with the specific e-signature vendors you identify. Most e-signature options are versatile in terms of their compatibility. For instance, most are compatible with such platforms and operating environments as Windows, Macs, Linux/Unix, and various mobile devices.

A Little Hand-Holding Explain why you use and trust electronic documents and signatures. Take the time to outline the typical steps in a transaction process to your clients and customers so that they understand what to expect (generally speaking) at each stage of the process. Then, take the time to explain how you use electronic documents and signatures to conduct your business. The use of e-signature software can actually be seen as a positive differentiator between you and other agents and brokers. Confidently utilizing the most advanced technology showcases your commitment to a higher level of customer service. If your clients understand the benefits of using e-signature technology, then they are far more likely to agree. This is especially true for clients who may not have used e-signatures in the past. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

Get your client's consent to use electronic documents in the transaction. After you explain how electronic documents and e-signatures work, get your client's consent to use electronic documents in the transaction. As we discussed in Unit 2, ESIGN contains a consumer consent provision. Under this provision, electronic documents are not valid if the consumer has not consented to receive the documents in an electronic format. Additionally, make sure your clients have access to a computer and the Internet, and that they are able to open any documents you may send electronically. You should also make sure they understand the importance of the documents you plan to send them. These are not just updates or notes or other miscellaneous documents that they can open and skim and file away or delete. NOTE: Always comply with your local and state laws when delivering consumer disclosures and obtaining consumer consent. Individual brokerages are also likely to have their own internal policies on what constitutes formal consumer consent. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

Stay informed to keep up with the pace of business. For better or worse, the use of e-mail in negotiations is not likely to go away anytime soon. In fact, with the growing popularity of cloud-based "software-as-a-service" technology and the increasingly efficient selection of e-signature vendors, it is likely that electronic transactions are only going to become more and more popular. The goal, then, becomes twofold: How do you protect yourself and your clients during electronic negotiations; and How do you use this technology to provide your clients with the best service possible, while also growing your business The trick—and it is not really much of a trick—is to stay informed. Stay abreast of the latest case studies and legal precedents. Keep informed of local, state, and federal laws, especially those relating to technology and electronic transactions. And, last but not least, spend a few minutes every week researching the latest technology. See how other agents and brokers are using it to better their businesses and customer service, and think about how you might use it in yours.

It is all part of the "mobile wave," as clients become more and more tech-savvy. While it is easy to write off e-mail negotiations and e-signature technology as something only used by a few agents, the truth is quite different. In fact, real estate agents are not the only ones who have gone mobile—working on their laptops, tablets, or smartphones to close deals from any location at any time. Clients and customers are riding the "mobile wave," too, so do not underestimate your clients' ability to navigate a transaction electronically. You do, however, have to make sure that your clients and customers understand their rights when it comes to electronic contracts and e-signatures, and that they properly consent to participating in a negotiation that is taking place electronically rather than on printed paper.

Stay informed to keep up with the pace of business. For better or worse, the use of e-mail in negotiations is not likely to go away anytime soon. In fact, with the growing popularity of cloud-based "software-as-a-service" technology and the increasingly efficient selection of e-signature vendors, it is likely that electronic transactions are only going to become more and more popular. The goal, then, becomes twofold: How do you protect yourself and your clients during electronic negotiations; and How do you use this technology to provide your clients with the best service possible, while also growing your business The trick—and it is not really much of a trick—is to stay informed. Stay abreast of the latest case studies and legal precedents. Keep informed of local, state, and federal laws, especially those relating to technology and electronic transactions. And, last but not least, spend a few minutes every week researching the latest technology. See how other agents and brokers are using it to better their businesses and customer service, and think about how you might use it in yours. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

It is all part of the "mobile wave," as clients become more and more tech-savvy. While it is easy to write off e-mail negotiations and e-signature technology as something only used by a few agents, the truth is quite different. In fact, real estate agents are not the only ones who have gone mobile—working on their laptops, tablets, or smartphones to close deals from any location at any time. Clients and customers are riding the "mobile wave," too, so do not underestimate your clients' ability to navigate a transaction electronically. You do, however, have to make sure that your clients and customers understand their rights when it comes to electronic contracts and e-signatures, and that they properly consent to participating in a negotiation that is taking place electronically rather than on printed paper.

Keep careful records of every exchange. Just as you would keep track of every written document relating to a specific transaction, you must also keep a record of your e-mail communications with your client and anyone else involved in the transaction. This may seem like an obvious point, but in the electronic age, where getting rid of a vital exchange is as simple as an accidental click of the "Delete" key, it is a point worth noting! In fact, most states have guidelines pertaining to how long records relating to a transaction must be maintained. This includes electronic documents, so do not go into your e-mail account at the close of a transaction and delete entire conversation threads. Instead, plan to maintain and preserve all pertinent electronic documents and correspondence for your records and in accordance with state and federal laws.

Keep careful records of every exchange. Just as you would keep track of every written document relating to a specific transaction, you must also keep a record of your e-mail communications with your client and anyone else involved in the transaction. This may seem like an obvious point, but in the electronic age, where getting rid of a vital exchange is as simple as an accidental click of the "Delete" key, it is a point worth noting! In fact, most states have guidelines pertaining to how long records relating to a transaction must be maintained. This includes electronic documents, so do not go into your e-mail account at the close of a transaction and delete entire conversation threads. Instead, plan to maintain and preserve all pertinent electronic documents and correspondence for your records and in accordance with state and federal laws.

Definition Criteria The signer understands that they are signing a document. The signature is attached to or otherwise associated with the corresponding document. The signer has consented to do business electronically. The document in question can be stored electronically. Congratulations! Please use the n

Make sure your electronic documents are tamper-proof. Make sure you select an e-signature software that protects your documents from any accidental or intentional tampering. For instance, the last thing you want is to send out a document for everyone's signature, only to get it back with lots of tiny, hard-to-spot changes that you have to hunt around to find. Fortunately, most e-signature vendors state that their documents are tamper-proof and sent out in a format (such as an image, for instance) that prevents signers from actually altering the text. Your clients would still be able to leave a note or question for you in the document using secure features within the e-signature program, but they would not be able to make any changes to the document itself. In addition to keeping your documents safe, you also want to select an e-signature option that can keep your client's signatures safe. Again, most e-signature software options come equipped with features—such as the use of SSL (secure sockets layer) for all transmissions—that prevent anyone from tampering with an electronically signed document.

Consider having an expert review your disclaimers, should you choose to use them. If your company does not currently have a guiding Standard Terms and Conditions policy that includes a carefully worded disclaimer, it might be time to weigh the pros and cons of drafting and implementing one. But, before you do post such terms to your website or include them as a disclaimer under your e-mail signature, consider having a legal professional review your language to ensure that you have taken into account all of the latest legislation and that you are as protected as possible.

Mirror Image Communications Under the "mirror image" rule, an offer must be accepted as is. The mirror image rule is a contract law principle that states that an acceptance to an offer cannot introduce new or revised terms. In short, it stipulates that a contract must be accepted as written. If any changes are made to an offer after one party has accepted it, then the contract must be resubmitted for approval. So, for instance, a person cannot decide during the negotiation process that a breach of contract has occurred if, in fact, no contract was ever formed. A very oversimplified example of a mirror image offer would be: Seller: "I will sell you my house for $340,000." Buyer: "Great! I will pay $340,000 for your house." The following is an example of a faulty mirror image offer: Seller: "I will sell you my house for $340,000." Buyer: "Great! I will pay $340,000 for your house, as long as you replace the furnace and cut down the dead tree." In the second example, the buyer responds with a rejection in the form of an acceptance—the buyer accepts the seller's offer, but only if the seller accepts the buyer's new terms.

Marisol is a real estate agent who is interested in integrating e-signature technology into her work. She is currently in the process of researching e-signature technology options. She knows that she wants something that will keep all of her clients' information secure and confidential. Which of the following features should she also look for in her software selection? Congratulations! That's the correct answer! A. A technology that uses self-authentication as its main form of authentication

Other Selection Factors to Consider Choose e-signature software that adheres to all federal and state laws. Whichever e-signature software you select, it must conform with the requirements laid out in such acts as UETA and ESIGN, both of which were crafted to complement and/or expand upon the consumer protections outlined in legislation such as the Statute of Frauds and the Consumer Protection Act. Remember that, according to UETA, the key criteria for ensuring the validity of an e-signature include: Intent to sign: According to e-signature laws, a signature is only valid if the signer intends to sign something. Since the e-signature laws do not define the manner in which intent is demonstrated, this is a key evidentiary consideration in developing an e-signature process. Signature associated with the record: The signature must be attached to or logically associated with the record being signed. Additionally, many e-signature providers also require an authentication to confirm that the purported signer did create the e-signature in question. Consent to do business electronically: The consumer has agreed to do business electronically. Record retention: The electronic records must be in a format that is capable of being retained and capable of being accurately reproduced for later reference. Understanding the validity of electronic signature and electronic contract execution, as well as the four considerations outlined above, is especially helpful when you are attempting to choose an electronic signature provider.

Many legal experts insist that e-mail disclaimers have limited value. So, just how much protection do e-mail disclaimers offer? While disclaimers are required by law for some, such as those who provide advice on taxes, most professionals are under no such legal obligation to include them. And, according to a recent article in The Economist, they actually offer very little protection: "E-mail disclaimers are one of the minor nuisances of modern office life, along with fire drills, annual appraisals and colleagues who keep sneezing loudly. Just think of all the extra waste paper generated when messages containing such waffle are printed. They are assumed to be a wise precaution. But they are mostly, legally speaking, pointless. Lawyers and experts on Internet policy say no court case has ever turned on the presence or absence of such an automatic e-mail footer in America, the most litigious of rich countries. "Many disclaimers are, in effect, seeking to impose a contractual obligation unilaterally, and thus are probably unenforceable. ... [A] footer stating that nothing in the e-mail should be used to break the law would be of no protection to a lawyer or financial adviser sending a message that did suggest something illegal." VIRTUAL FIELD TRIP

Others argue that e-mail disclaimers offer some protection. E-mail disclaimers are commonly used to limit contractual liability where someone automatically assumes that they have a contract with you. Adam Freedman, a lawyer and regular columnist for the New York Law Journal and Vocabula Review, notes the following: "[A]n e-mail disclaimer can prevent a contract from being formed, but ... an e-mail disclaimer does not create a contract with an unintended recipient. Contracts require a 'meeting of the minds'—they cannot be dictated unilaterally. "One note of caution: A court in Scotland recently observed that a disclaimer saying that 'Nothing in this e-mail constitutes a contract,' applies only to the body of the e-mail, not to any attachment. So you'll want to be precise in wording any disclaimer."

Do not over rely on e-mail to keep your clients up to speed. For clients who do not mind—and perhaps even prefer—to communicate electronically, it is still important for you to remember that a personal call can go a long way in building good rapport with your clients. Think about it this way: You are helping your clients through a complicated and substantial purchase—a major life experience. TIP: If you over rely on e-mail to communicate with your clients, you may leave them feeling cold. Remember that the goal here is to provide your clients with the best service possible with the hope that they will refer future business your way. If you are nothing more than an invisible source at the other end of an e-mail thread, your clients may find you relatively unmemorable, despite your hard work and effort.

Read your e-mails carefully before you hit "Send." As we have already discussed, because of the instantaneous nature of e-mail—because a major work-related e-mail can now just as easily reach you at a dinner party as it can at the office—the temptation to send a quick response to every e-mail you receive can be overwhelming. Do your best to hold off on responding to such e-mails until you have the time to read over them carefully and give their contents your full attention. After all, a hasty response to a half-read e-mail can certainly lead to unwanted and unforeseen consequences. If you absolutely cannot resist the urge to at least send a quick acknowledgement e-mail, keep it short and simple. Something like, "Thanks for this e-mail. I look forward to going over it in detail," can keep you from inadvertently agreeing to anything.

efore you post any disclaimers to your website or include them under your email signature, you should ____________. B. consult with an attorney This is the correct answer Feedback: Have an attorney review your language to ensure that you have taken into account all of the latest legislation and that you are as protected as possible. Otherwise, there is no reason to use blanket disclaimers. 2. Courts, supported by federal and state laws, are now obligated to ensure that electronic records and signatures are not discounted based solely on their _____. A. format Congratulations, this is the correct answer! 3. Broker Betsy does not think her emails with a client will be legally binding. She knows that she and the client have shown a meeting of the minds on all material terms, but the only signature present is Betsy`s preset email signature. Betsy is _________. A. missing an important point Congratulations, this is the correct answer! 4. When engaging in electronic negotiations, brokers and agents must keep all pertinent __________ correspondence relating to a transaction. C. electronic and printed on paper This is the correct answer D. thank you Feedback: Real estate professionals are used to keeping paper correspondence in transaction files. They must now keep records of emails and other electronic correspondence in order to ensure the validity of the transaction. 5. What will your clients receive electronically? What will they receive formal hardcopies of? It is important to iron out such issues ___________ to ensure you and your clients are on the same page. A. upfront This is the correct answer Feedback: Clients also need to know whether they can withdraw their consent to communicate electronically at some later stage. Consent is a crucial factor?and understanding is crucial to that consent. 6. Broker Ron has just completed an electronic correspondence with a client that Ron thinks has closed the deal. To make sure, Ron should ______________. A. call the client B. send a follow-up email Congratulations, this is the correct answer! C. make the client come into the office D. go to the client`s office 7. When choosing software, consider software that is secure, compatible, easy for ____________ to use, customizable in terms of branding and integration and capable of authenticating e-signatures. C. you and your clients Congratulations, this is the 8. Under the "mirror image" rule, an offer must be accepted as is Congratulations, this is the correct answer! D. only after modification 9. ____________ work on their laptops, tablets or smartphones to close deals from any location at any time. A. Real estate agents B. Clients C. Real estate professionals and consumers Congratulations, this is the correct answer! D. Real estate brokers

Real estate professionals who over-rely on email and electronic documents and signatures run the risk of being ___________. B. unmemorable This is the correct answer

Transitioning from ink-on-paper signatures to electronic ones can be intimidating. Technology should be seen as a vital tool for growing your business—something that makes your work easier, not more complicated. As always, the goal is to work smarter, not harder. Recognize, then, as you make or ponder making this switch from "wet" signatures to electronic ones, that every transition takes a little time. So, what is the best way to go about adding e-signatures to your processes? Throughout this final lesson, we will take a closer look at a few simple steps that will help get you on the right path.

Research your options, and evaluate your business plan. As you have seen, there are a number of e-signature software options available. Do your research and identify the one that best fits your needs and your budget. You may even find it helpful to ask your fellow agents to share their recommendations and experiences. Remember, some points to consider during your research include: Compliance with federal and state regulations Authentication methods Vendor security Software compatibility Ease of use Customization and brand integration Customer service and support Careful research is a crucial part of any new investment or growth strategy. As you evaluate your software options, also take a look at your business plan, and consider how the technology may boost your bottom line after that initial investment. For instance, based on your research, how much time can you possibly save in a given transaction by using e-signatures? Can you put that extra time toward cultivating new clients? Can you anticipate any reduced spending on materials such as paper and postage?

Look for e-signature software that includes customizable forms and templates. Another feature to look for is the ability to create and save customizable forms and templates. This is especially helpful if you find that you send many of the same types of documents for e-signature over and over again. With some e-signature options, you can create your own individual document templates, utilize fully automated transaction templates (complete with authentication, reminders, and more), and/or draw on a template from an easily accessible organization-wide shared template library. Using established templates reduces the risk of an error making its way into your transaction documents. It also is faster than recreating each document from scratch, so your customers will see the results they want even faster. NOTE: Some e-signature programs offer free webinars on how to use their template features, so you do not have to worry about trying to figure it out all on your own. These types of educational seminars are especially ideal if you are a visual learner. Plus, the sessions are led by someone who is experienced with the software and ready to take your questions.

Select e-signature software that allows you to incorporate your own branding. If you already have a website, color scheme, and logo for your business, then you should look for an e-signature software that will allow you to integrate your own professional branding. After all, you want everything your clients receive from you to look and feel professional and consistent to avoid any confusion. If you do not currently have your own colors, e-mail texts, and/or hyperlinks to integrate into your e-signature software, then you can always opt for a clean, standard look, and add your own branding once it is ready.

Identify a timetable for implementing this new technology into your transactions. If you are nervous about making this transition all at once, take baby steps. Pick one transaction, perhaps one with tech-savvy clients, and give it a try. Let your clients know that this is one of the first times you are using e-signature technology, and ask for their feedback as you go along. Then, once the transaction is complete, look back and evaluate how it went. Ask yourself questions, such as: Were there any unexpected issues? Did it go better than you expected? Were you able to save any time? What would you like to change for next time? What did your clients think of the experience? Were there any issues with the software—any features that did not work the way you had hoped? Are there any software features that you would like to learn how to take better advantage of for next time—like the use of templates or integrated branding? Evaluate your experience—and your client's!—after each electronic transaction. As you get more comfortable using the technology, introduce it to more and more of your transactions.

Stay up to date on local, state, and federal laws. As noted elsewhere in this course, legislation like ESIGN and UETA ensure that an e-signature will not be discounted simply because of its format. The acts do not, however, ensure that the bank or mortgage broker you come into contact with will accept e-signatures. Do your research. Find out who will accept e-signatures and who will not. Once you know, plan on checking in again from time to time. More and more housing-related institutions are accepting e-signatures every day. In April 2010, the Federal Housing Administration (FHA) announced that it will accept e-signatures on third-party documents. Upon hearing the news, Vicki Cox, then-president of NAR, applauded the decision, stating: "This is a great step forward in speeding up the real estate transaction and making it easier for buyers, sellers, and real estate professionals to complete transactions timely and efficiently." David Stevens, then acting as Assistant Secretary for Housing, noted that this was only the first step, saying: "This is just the beginning of the FHA's commitment to use more electronic documents in our loan approval process. Over time, we will be expanding the number and types of documents with electronic signatures which will be acceptable to FHA." On January 30, 2014, the FHA announced that it is granting expanded authority to lenders to accept electronic signatures on documents associated with mortgage loans. In announcing the change, FHA Commissioner Carol Galante stated: "By extending our acceptance of electronic signatures on the majority of single family documents, we are bringing our requirements into alignment with common industry practices. This extension will not only make it easier for lenders to work with FHA, it also allows for greater efficiency in the home-buying and loss mitigation process." In May 2012, Freddie Mac announced that it, too, will accept e-signatures. The mortgage giant outlines its e-signature requirements in its eMortgage Guide. Remember, policies change each day, and more and more companies are adopting e-signature policies, so it is in your best interest to stay on top of local, state, and federal laws. VIRTUAL FIELD TRIP To read the FHA's April 2010 mortgagee letter announcing its decision to accept e-signatures on third-party documents, click here. To read the FHA's January 2014 mortgagee letter announcing its decision to accept e-signatures on all FHA-approved mortgages, click here. To read Freddie Mac's announcement, click here. Additionally, Freddie Mac's e-signature policies are outlined in the organization's eMortgage Guide, should you wish to do additional research. You also may want to review Freddie Mac's Electronic Signatures and Transactions FAQs webpage. For even more information, check out "Finally, Freddie Mac to Allow E-Signatures," by Curtis Van Carter for ActiveRain, as well as "Fannie OK's E-Signatures on REO Offers," from REALTOR® Mag.

Make sure you have the training you need to use the technology correctly. It does not matter how great a new piece of technology is—how revolutionary or how groundbreaking—if you cannot figure out how to use it, then it's worthless to you. While this may seem like an obvious point, it is definitely something to keep in mind while researching your e-signature software options. Before you invest in any new technology, make sure it is something that you can see yourself actually learning how to use. For instance, get informed by: Watching any free online demonstrations on the vendor's website Checking YouTube for any helpful how-to videos Talking to the vendor's customer service team Seeing if the vendor offers any free workshops or training webinars Taking advantage of free trial offers E-signature technology is relatively intuitive; it is just a matter of getting the basics down.

Talk to your brokerage and fellow agents about the change. If you are interested in seeing your agency adopt e-signature technology, talk to your brokerage about the advantages and what you will need for implementation (the technology, training, etc.). Do not be discouraged if you are met with some early resistance; after all, transitions can be intimidating. Instead, take the time to discuss some of the benefits of e-signature technology, including: Accelerated transactions Increased productivity More time spent with clients Improved workflow management Reduced paper usage and filing time And remember, change does not always happen overnight. It takes some time to fully integrate any new process, so do not try to rush it.

An e-mail exchange must show a meeting of the minds to establish a binding contract. Ultimately, the court ruled in favor of Grunberg, finding that there was no breach of contract, because the two parties never reached a mutual agreement on the purchase price (remember that Grunberg's counteroffer price was listed at $52 million). In its ruling, the court stated the following: "The right to match 'any legitimate, better offer' proffered by the e-mail was tied to the asking price of $52 million. Given that the parties did not tentatively agree on the price term linked to the right of first refusal proposed in the e-mail, there was never any meeting of the minds between the parties as to that right of first refusal. "Although plaintiff apparently alleges that the parties subsequently reached an oral or implied-in-fact agreement that plaintiff would have a right of first refusal based on a different price term ($50 million), any such unwritten right of first refusal is unenforceable under General Obligations Law § 5-703. Accordingly, defendant's motion to dismiss the complaint should have been granted."

The parties engaged in the e-mail exchange must have the proper authority to do so. In addition to arguing that there was never any meeting of the minds in terms of the purchase price and that the agreement was insufficient because it had only been memorialized in e-mail, Grunberg also argued two more crucial points, according to court documents: "[T]hat, even if it is possible for an e-mail to satisfy the applicable statute of frauds, the e-mail in question contained only the automatically generated identification block of the brokerage firm from which it was sent and therefore was not properly subscribed; and that neither ... the broker for defendant whose e-mail referred to the right of first refusal, nor his firm ... had authority under the firm's listing agreement to contractually bind [the] defendant." To this particular argument, the court stated: "Given that the complaint must be dismissed for the reason already discussed, we need not resolve whether either of these additional arguments would furnish independent grounds for dismissing the complaint on a pre-answer, pre-discovery motion." Even though the court did not rule on these points, the issues certainly make a statement to real estate professionals: Err on the side of caution, and make sure your e-mails are crystal clear! .

An e-mail exchange must show a meeting of the minds to establish a binding contract. Ultimately, the court ruled in favor of Grunberg, finding that there was no breach of contract, because the two parties never reached a mutual agreement on the purchase price (remember that Grunberg's counteroffer price was listed at $52 million). In its ruling, the court stated the following: "The right to match 'any legitimate, better offer' proffered by the e-mail was tied to the asking price of $52 million. Given that the parties did not tentatively agree on the price term linked to the right of first refusal proposed in the e-mail, there was never any meeting of the minds between the parties as to that right of first refusal. "Although plaintiff apparently alleges that the parties subsequently reached an oral or implied-in-fact agreement that plaintiff would have a right of first refusal based on a different price term ($50 million), any such unwritten right of first refusal is unenforceable under General Obligations Law § 5-703. Accordingly, defendant's motion to dismiss the complaint should have been granted."

The parties engaged in the e-mail exchange must have the proper authority to do so. In addition to arguing that there was never any meeting of the minds in terms of the purchase price and that the agreement was insufficient because it had only been memorialized in e-mail, Grunberg also argued two more crucial points, according to court documents: "[T]hat, even if it is possible for an e-mail to satisfy the applicable statute of frauds, the e-mail in question contained only the automatically generated identification block of the brokerage firm from which it was sent and therefore was not properly subscribed; and that neither ... the broker for defendant whose e-mail referred to the right of first refusal, nor his firm ... had authority under the firm's listing agreement to contractually bind [the] defendant." To this particular argument, the court stated: "Given that the complaint must be dismissed for the reason already discussed, we need not resolve whether either of these additional arguments would furnish independent grounds for dismissing the complaint on a pre-answer, pre-discovery motion." Even though the court did not rule on these points, the issues certainly make a statement to real estate professionals: Err on the side of caution, and make sure your e-mails are crystal clear! Unit Quizzes and the minimum required study time must be met to unlock Final Exam. Btn Prev

There are a variety of online authentication methods. There are a number of online authentication methods available these days. The graph below starts with the online authentication method that offers the lowest level of security (self-authentication) and ends with one (biometric authentication) that offers the highest level.The methods in blue are typically used as prior authentication methods, while digitized signature (dark gray) is typically used as a post authentication method. Phone-based authentication (red) can be used as either a prior or post authentication method. Self-authentication (light gray) ultimately offers so little security that it fails to be a legitimately recognized prior or post authentication method.

There are additional security features to look for in your e-signature technology. As you examine the security features offered with the various e-signature software options, keep in mind that the technology you ultimately select is going to be responsible for maintaining a fairly large amount of confidential information. This means that you want to make your selection with an emphasis on the security features of the technology. For instance, check to see if the e-signature technology: Adheres to the standards outlined in ESIGN and other related legislation Meets national and international security standards Offers an encrypted user authentication Provides a detailed audit trail for each transaction (including the sender name and e-mail address, timestamps, and originating IP address for each action) Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

Select an e-signature software that uses several methods of authentication. When you select e-signature technology for your business, choose one with several methods of prior and post authentication to increase security and consumer confidence. This also helps to draw further distinction between authenticating the user and having the user actually acknowledge and sign the document. Think about it this way: Just because you entered the right password to get to the document in question does not mean you actually agreed to the terms outlined in the document. The more layers of authentication protection that are in place, the better. For instance, an e-signature software with an authentication system that utilizes a combination of e-mail authentication, knowledge-based authentication, shared secret authentication, phone-based authentication, and biometric authentication is going to offer far more security than a software that relies on PKI alone. NOTE: It is best to select authentication methods that do not require users to have specific software or hardware, because such requirements limit who is able to use the e-signature technology and from where. Certain biometric and PKI authentication methods may present some limitations to users, for instance, in that both methods may require specific hardware or software.

There are additional security features to look for in your e-signature vendor. In addition to the security features associated with the technology itself, you should also take a look at the vendor's security measures. After all, if the vendor itself is not secure, then how secure can its technology really be? For instance, check to see if the e-signature vendor: Conducts/allows third-party security and privacy audits Has a workable disaster recovery plan and conducts disaster recovery testing Complies with global privacy and data protection regulations Conducts regular reviews of its code to proactively identify vulnerabilities Provides secure and certified data centers

Lesson 1: Technology's Shift in Legal Power Gone are the days when e-mail exchanges meant little. A decade ago, the idea of negotiating a set of terms over e-mail might have been a novel one. Certainly, the idea that the discussion could be legally binding was even more remote. Even today, some agents view e-mail discussions as about as binding as a verbal conversation. Thanks to a series of laws focused on electronic transactions and e-signatures, a precedent-setting ruling by a court of appeals, and the advancement of technology, however, times, they are a-changin'. As a real estate professional, you probably know that the Statute of Frauds in each state requires that a contract for the sale of property must be "in writing." However, with legislation like the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN) (more on these shortly), there is now a very distinct difference between "in writing" and "on paper." And, in the eyes of the law, a negotiation conducted over e-mail, can, in fact, be perfectly binding.

Today, contractually binding e-mails are a reality. With so much on the line, how can you distinguish between a friendly e-mail exchange in which you think you are just discussing some terms, and one that actually binds you to those terms? Ask yourself the following questions: Do all of the material terms outlined in the e-mail discussion reflect a meeting of the minds when considered together? (We will discuss the "mirror image" rule shortly.) Is there a signature of someone authorized to participate in the negotiations? (This can be something as basic as a preset e-mail signature, so watch out.) If you can answer yes to both of these questions, then you may have a legally binding e-mail in your inbox. Combine the growing popularity of e-mail negotiations with a too-fast read-and-reply on the part of a real estate agent, and suddenly "We've got a deal!" takes on a whole new meaning. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

What it all means: Make sure your e-mails do not have unintended consequences. While we will be reviewing a number of strategies for ensuring clear communication throughout this course, the takeaways from this real-life lawsuit cannot be underscored. Always remember that you need to be very careful about what you say in your work-related e-mails, especially when you are representing your client's interests. Keep the following quick tips in mind when engaging in electronic negotiations: Keep records of all pertinent electronic correspondence relating to a transaction. Follow up on even the smallest of details to eliminate the risk of ambiguity or confusion. Do not take action based on an assumption. If you do not hear back about a point, get confirmation before proceeding under the assumption that the other party's silence is an acknowledgement or consent (especially since silence cannot be legally construed as such). Send a follow-up e-mail outlining the key points of any verbal discussion, and ask for the other party's acknowledgement that you have correctly summarized the conversation. Unit Quizzes and the minimum required study time must be met to unlock Final Exam.

What it all means: Make sure you have the authority you need from the outset. In addition to ensuring that your electronic communications are as clear as possible, Naldi v Grunberg also re-enforces the importance of consents and disclaimers (and we will be discussing both of these points in greater detail throughout this course). In fact, to ensure that you, as a real estate agent, have the proper authority you need to engage in electronic negotiations and that every party involved in the transaction understands the parameters of any electronic negotiations, the law firm of Thompson Hine states the following: Any communication by a broker on behalf of its principal should require that the broker indicate on all e-mail communications that the broker is not authorized to bind the principal without the principal entering into a separate agreement with the counterparty to the e-mail. Any e-mail communication transmitting an offer, counteroffer, term sheet, contract, lease, or other similar real estate-related communication should be accompanied by an appropriate disclaimer to the effect that the e-mail in question may not form the basis of a binding agreement without the express written confirmation of the parties in a separate written agreement.

Technology's Shift in Legal Power Gone are the days when e-mail exchanges meant little. A decade ago, the idea of negotiating a set of terms over e-mail might have been a novel one. Certainly, the idea that the discussion could be legally binding was even more remote. Even today, some agents view e-mail discussions as about as binding as a verbal conversation. Thanks to a series of laws focused on electronic transactions and e-signatures, a precedent-setting ruling by a court of appeals, and the advancement of technology, however, times, they are a-changin'. As a real estate professional, you probably know that the Statute of Frauds in each state requires that a contract for the sale of property must be "in writing." However, with legislation like the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN) (more on these shortly), there is now a very distinct difference between "in writing" and "on paper." And, in the eyes of the law, a negotiation conducted over e-mail, can, in fact, be perfectly binding.

oday, contractually binding e-mails are a reality. With so much on the line, how can you distinguish between a friendly e-mail exchange in which you think you are just discussing some terms, and one that actually binds you to those terms? Ask yourself the following questions: Do all of the material terms outlined in the e-mail discussion reflect a meeting of the minds when considered together? (We will discuss the "mirror image" rule shortly.) Is there a signature of someone authorized to participate in the negotiations? (This can be something as basic as a preset e-mail signature, so watch out.) If you can answer yes to both of these questions, then you may have a legally binding e-mail in your inbox. Combine the growing popularity of e-mail negotiations with a too-fast read-and-reply on the part of a real estate agent, and suddenly "We've got a deal!" takes on a whole new meaning.